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Trump’s economic confidants battle for sway on tax, Fed policy

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Economic advisers in Donald Trump’s orbit are clashing over their favored policy ideas, a fight that is spilling into public view as they jockey for influence over the presumptive Republican presidential nominee’s second-term plans.

In recent weeks, informal advisers have floated ideas such as a proposal for a flat tax; penalties for countries that shift away from the U.S. dollar; and reforms to the Federal Reserve to give the president more control over the independent central bank.

The only problem with these ideas? Trump himself has not signed off on any of them and the unauthorized policy plans are annoying his top campaign staff.

While he has groused about the Chinese yuan, the high cost of housing or the Fed’s stubbornly high interest rates in passing conversations with advisers, he hasn’t voiced support for specific ideas to tackle these problems, nor has he requested a formal plan from his cadre of informal economic advisers,

The public jockeying and extreme ideas from various factions within Republican circles undercut the strategy of a remarkably disciplined campaign that has helped Trump cruise to the party’s nomination even as he’s mired in court cases. The plans, which often embrace fringe economic ideas, reinforce Trump’s political unorthodoxy, leaving voters — and markets — uncertain on what he would do with a second term.

Donald Trump at a rally in Pennsylvania
Donald Trump speaks during a campaign rally in Schnecksville, Pennsylvania on April 13.

Hannah Beier/Photographer: Hannah Beier/Bloom

These economic trial balloons have infuriated top Trump campaign officials and created distractions as they prepare for the general election. The campaign is consumed with managing Trump’s appearances at his ongoing criminal trial in New York City involving hush-money payments, and figuring out ways to generate political momentum from the days in court. They are also busy strategizing how to win key swing states in November and planning fundraisers, as they try to close a wide campaign cash gap with President Joe Biden.

One person familiar with the proposals compared the recent raft of economic ideas to Trump officials frequently appearing on TV when he was president, in the hopes he would catch their appearance and they could shape his viewpoint. 

Policy plans

A handful of conservative think tanks have been generating white papers and collecting resumes to prepare for a return of Trump, including the Heritage Foundation, America First Policy Institute, Conservative Partnership Institute and the Center for Renewing America.

Trump is also receiving economic advice from former top officials, including director of the Office of Management and Budget Russ Vought, former U.S. Trade Representative Robert Lighthizer, former head of the Council of Economic Advisers Kevin Hassett and former National Economic Council director Larry Kudlow, along with wealthy donors including John Paulson and Scott Bessent, both of whom have been floated as potential candidates for Treasury secretary. Many of his key advisers don’t support ideas to meddle with the Fed.

For months, the Trump campaign has been trying to rein in proposals from various factions with limited success.

“Let us be very specific here: Unless a message is coming directly from President Trump or an authorized member of his campaign team, no aspect of future presidential staffing or policy announcements should be deemed official,” campaign managers Susie Wiles and Chris LaCivita said in a written statement to the media this winter.

Monetary policy battle

Whether and how to rein in the Federal Reserve’s power is one of the most divisive issues among Republicans. During Trump’s first term in the White House, he often tried to pressure the Fed and Chair Jerome Powell to keep interest rates low.

It’s an open question whether Trump in a second term would select Fed officials and other White House aides that would want to keep the central bank independent, said Nathan Sheets, the global chief economist at Citigroup Inc.

“Any kind of policy that eroded independence in an appreciable way would be greeted by the markets very vigorously and adversely and would be a source of great pressure and volatility,” he said. “I think it would be such a problem that any gains a political actor might think that they would glean from undercutting Fed independence would be so small compared to the potential costs that they might have.”

Trump isn’t the first president to try to exert influence over the Fed by advocating for rate cuts and more dovish policies. 

Richard Nixon famously called for rate cuts, which made inflation roar back to life in the 1970s. In a 1984 White House meeting between President Ronald Reagan, White House chief of staff James Baker and then Fed Chair Paul Volcker, Baker pressured the central bank chief not to raise interest rates before the election.

Trump repeatedly criticized the Fed and Powell in 2018, when the central bank was still raising interest rates, and into 2019, even threatening to fire Powell. The Fed started cutting rates in the summer of 2019.

Fed independence

“We act like, ‘Oh my god, this could never happen.’ But it’s not like it hasn’t been attempted or succeeded in the past. It’s just that it was always being done through subterfuge because no one would have the gall to just come out and do it. But gall is not an issue for Trump,” said Stephen Myrow, a managing partner at Beacon Policy Advisers and a former George W. Bush Treasury official.

A few outside Trump advisers have discussed ways to give the president the power to oust Powell before his term ends in 2026.

Given the Fed’s independence as an institution, Trump cannot fire or replace Powell and instantly change monetary policy. All decisions made by the Federal Reserve require approval by the Board of Governors, so even one or two potential Trump nominees could be outvoted.

“The executive branch has already taken over monetary policy. Janet Yellen has used Treasury policy to usurp monetary policy and ease financial conditions. Her actions are one reason rate hikes have been ineffective,” Bessent, a Trump donor, said in an interview, refuting the notion Trump is seeking a major change. “President Trump and his economic team understand that the one thing that anchors medium and long-term rates is the Fed’s credibility.”

–With assistance from Stephanie Lai and Rich Miller.

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Tax Fraud Blotter: Feeling entitled

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Custom-made; alter ego trip; super Genius; and other highlights of recent tax cases.

Cerritos, California: Customs broker Frank Seung Noah, of Corona, California, has pleaded guilty to defrauding importers out of more than $5 million, including after he had been indicted on fraud charges, and to committing more than $1 million in tax evasion.

Noah owned and operated Comis International, a logistics and supply-chain company that offered customs import brokerage services on behalf of businesses. From 2007 to 2019, Comis was an import broker for Daiso, a Japan-based variety and value store with stores in the U.S. Noah provided Daiso with false customs duty forms and invoices to support fraudulent requests for reimbursement for duty fees. These forms inflated the total amounts, resulting in Daiso overpaying Noah nearly $3.4 million.

After Noah was indicted for defrauding Daiso in 2022, he continued to defraud other clients out of more than $2 million using a different scheme. Noah defrauded two other client companies by invoicing and receiving funds from the two victim companies and then pocketing the money and later altering bank statements to cover his fraud.

Noah also evaded payment of federal taxes, resulting in a loss to the IRS of approximately $2.4 million, with penalties and interest continuing to accrue. After agreeing with the IRS that he owed more than $1 million in taxes in 2014, he dodged IRS attempts to collect, including by paying for two homes in his former girlfriend’s name, using check-cashing businesses to avoid IRS levies of his bank accounts, lying to IRS agents and spending thousands of dollars on country club memberships, travel and golf.

Sentencing is May 8. Noah faces up to 20 years in prison for each of two counts of wire fraud and up to five years for the tax evasion count.

Tampa, Florida: Terence Taylor has pleaded guilty to obstructing and impeding the administration of the internal revenue laws for actions seeking to defeat the collection of back taxes he owed to the IRS.

Taylor was sentenced in 2012 for failing to file his income taxes for several years while he lived in New York. He owed more than $810,000 in taxes and was required to pay the tax debt during the term of his sentence.

For more than seven years, continuing after he moved to Florida, Taylor engaged in a series of acts to defeat IRS collection. He hid assets, placed other assets and income in the names of alter egos or nominees such as his wife, and used money that he could have used to pay off his back taxes to buy assets including boats, jewelry and a home.

Taylor continued to earn income as a financial consultant during those years after 2012. He used that income for numerous personal purposes and expenses and only minimally paid his federal tax debt.

The IRS had made extensive efforts to collect Taylor’s debt between 2004 and 2008. Aside from contacting Taylor many times, IRS officers sent numerous forms for him to detail his financial situation. He responded with false or incomplete information about his assets, including boats, and about his business and its accounts and dates of operation. Taylor used his business income and bank accounts after 2012 to pay personal expenses, including marina and yacht club expenses, boat expenses and jewelry purchases.

Taylor also failed to file personal income tax returns for several years after his New York sentence had ended. 

He faces a maximum of three years in prison.

Hands-in-jail-Blotter

Pennsauken, New Jersey: Business owner Tri Anh Tieu, of Camden, New Jersey, has admitted to conspiring to defraud the IRS by concealing cash wages paid to employees.

Tieu owned Tri States Staffing, which provided temporary workers to local businesses. Between the third quarter of 2018 and the second quarter of 2022, Tri States received more than $2.5 million in payments from customers.

Tieu paid employees in cash and failed to pay over the payroll taxes on those wages. He spent at least some of the unpaid taxes on personal expenditures, including gambling.

He admitted that he caused a tax loss of some $305,332.

The count of conspiracy to defraud the U.S. carries a maximum of five years in prison and a fine of up to $250,000. Sentencing is June 26.

Charleston, South Carolina: Business owner Jonathan Ramaci, of Mt. Pleasant, South Carolina, has been sentenced to 18 months in prison after pleading guilty to wire fraud and filing a false income tax return.

Ramaci defrauded the Small Business Administration in his application and receipt of some $214,000 in Paycheck Protection Program and Economic Injury Disaster Loan funds, submitting fraudulent tax documentation to the SBA for the PPP loan. For the EIDL loans, Ramaci falsely represented to the SBA the revenue and costs of goods sold for the businesses he was applying for.

From 2017 to 2021, Ramaci either failed to file or filed false income tax returns and owes the IRS $289,531. He paid personal expenses from a business he owned and operated, Elements of Genius, and did not report the expenses paid as income.

Los Angeles: Attorney Milton C. Grimes has been sentenced to 18 months in prison for evading more than $7.2 million in federal and state taxes over more than two decades.

He pleaded guilty late last year to one count of tax evasion relating to his 2014 taxes and admitted that he failed to pay $1,690,922 to the IRS. Grimes did not pay federal income taxes due for 23 years, 2002 through 2005, 2007, 2009 through 2011 and 2014 through 2023. The amount owed totaled $5,921,260, including tax, penalties and interest. Grimes also admitted he did not file a 2013 federal  return.

In addition to the federal tax evasion, Grimes admitted that he owed more than $1,313,231 in delinquent California taxes from 2014 to 2023.

Beginning in September 2011, the IRS attempted to collect Grimes’ taxes by issuing more than 30 levies on his personal bank accounts. From at least May 2014 to April 2020, he avoided payment by not depositing income he earned from his clients into his personal bank accounts. Instead, he purchased some 238 cashier’s checks totaling $16 million to keep the money out of the reach of the IRS. Grimes would also routinely purchase cashier’s checks and withdraw cash from his client trust account, his interest on lawyers’ trust accounts and his law firm’s bank account rather than pay the IRS.

Grimes was ordered to pay $7,236,556 in restitution, both to the IRS and to the California Franchise Tax Board.

Howey-in-the-Hills, Florida: Business owner Dorian Farmer has pleaded guilty to one count of failure to pay employment trust fund taxes and two counts of willfully failing to file returns. 

Farmer owned several area businesses and for years collected employment trust fund taxes from his employees. Rather than turning the money over to the IRS, Farmer took large, unreported cash distributions from one of his businesses. He also failed to file returns for himself and one of his businesses, Titleist Technologies, d.b.a. Summit Joint Performance, for tax year 2000.

Farmer’s acts resulted in a total tax loss of $806,653.

He faces up to five years in prison for the employment trust fund offense and up to a year in prison for each offense of willful failure to file a return.

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AICPA releases framework for stablecoin reporting

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The American Institute of CPAs published information on reporting on stablecoins, a type of cryptocurrency, providing a framework to stablecoin issuers for presenting and disclosing information related to the tokens they issue, and to report on the availability of cash or other assets that back them.

Stablecoins are a kind of digital asset where the value is pegged to the assets backing them, such as U.S. currency, exchange-traded commodities like precious or industrial metals, or some other form of crypto.

The purpose of the AICPA’s Assurance Services Executive Committee document, 2025 Criteria for Stablecoin Reporting: Specific to Asset-Backed Fiat-Pegged Tokens, is to offer a framework for presenting and disclosing information about stablecoins to promote consistent reporting among issuers and boost trust in the stablecoin space.

The release comes as the Trump administration is taking a decidedly more welcoming attitude to the crypto industry, including announcing a crypto reserve and setting up a crypto task force at the previously skeptical Securities and Exchange Commission. 

Next month, as a second part of the stablecoin reporting criteria, the Assurance Services Executive Committee plans to release Proposed Criteria for Controls Supporting Token Operations: Specific to Asset-Backed Fiat-Pegged Tokens for public comment. As these control criteria are part of overall stablecoin reporting, they eventually will be incorporated into the 2025 Criteria for Stablecoin Reporting document once they’re finalized. 

“This is the first available framework for stablecoin issuers to report on stablecoins, and the AICPA is excited to be at the forefront of bringing transparency and consistency to the digital assets space,” said Ami Beers, senior director, assurance and advisory innovation at the AICPA & CIMA, in a statement Thursday. “These criteria will serve as the basis for evaluating the availability of redemption assets that back stablecoins in attestation services that practitioners provide to their clients, driving this dynamic practice area forward for the accounting profession.”

The 2025 Criteria for Stablecoin Reporting: Specific to Asset-Backed Fiat-Pegged Tokens can be found here. For more information relevant to stablecoins, practitioners can access the stablecoin reporting and assurance page.

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CPA execs feel shakier about US economy

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CPA business executives’ outlook on the U.S. economy appears to be dimming, thanks to persistent inflation and growing worry over tariffs, according to a new survey from the AICPA & CIMA.

The quarterly survey found that the post-election jump in business executives’ optimism about the U.S. economy has moderated, dropping from a more than three-year high of 67% in the fourth quarter to 47% in the first quarter of this year. The survey polls chief executive officers, chief financial officers, controllers and other CPAs in U.S. companies who hold executive and senior management accounting roles.

The survey was conducted before the Trump Administration imposed tariffs this week on Canada, Mexico and China (and then delaying the tariffs today on Canada and Mexico for a month), but respondents were asked their general views about unspecified tariffs if they were put in place. Fifty-nine percent indicated that tariffs would have a negative effect on their businesses, while 85% said uncertainty surrounding the subject had influenced their business planning to some degree — nearly one in five (18%) described that impact as significant.

Inflation remained the top concern for CPA business execs, followed by issues related to staffing — employee and benefit costs (No. 2), availability of skilled personnel (No. 3), and staff turnover (No. 10). Domestic political leadership, which was absent from last quarter’s top 10 concerns, reemerged at No. 6.

“There are a lot of warning signs right now for business executives, particularly around inflation, payroll costs and consumer confidence, with tariffs adding another layer of uncertainty,” said Tom Hood, AICPA & CIMA’s executive vice president for business engagement and growth, in a statement Thursday. “That said, it’s important to recognize that economic optimism remains higher than at any point since mid-2021, aside from last quarter’s notable increase. Additionally, expansion plans have held steady from the previous quarter.”

The survey also found that business executives who said they were optimistic about their own organization’s outlook over the next 12 months dropped from 53% to 50%, quarter over quarter.

Revenue and profit expectations for the next 12 months both eased from the fourth quarter’s large increases. Revenue growth is now anticipated to be 3%, down from a 3.3% projection in the fourth quarter. Profit projections are now 2%, down from 2.2% last quarter.

Survey respondents who expect their businesses to expand over the next 12 months remained unchanged at 57%.

Some 39% of the business executives polled indicated they had too few employees in the first quarter, a 1% increase from the fourth quarter. One-in-five said they were ready to hire immediately, unchanged from last quarter.

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